Is renting stupid?
Considering you are making someone else rich and not building up assets for yourself..
I lived in an apartment for two and a half years before I got married and honestly, sometimes I kind of miss it. Especially the part where I got to sit at my window and watch someone else cut the grass, rake the leaves, and shovel the snow.
I didn't buy my house until I was 40, because I had good reasons to rent.
I had a profession that required me to move every 6 months or so, as I worked my way up.
I had significant credit card debt and student loans to pay off from grad school. My credit rating was much stronger, and therefore my loan rates were lower, once I cleared those debts away.
When I finally settled down in one place, I rented for two years, very close to the house I live in now. I wanted to be sure I liked the neighborhood.
Owning a house is a great investment, but it's not something everyone should jump into just for that reason. You have to be financially stable, and have a work situation that allows you to park yourself in one place.
yecall......The decision to buy or rent is strictly individual choice for the reasons each person may have for doing either. This is the case unless of course a person cannot qualify to buy at a certain time & must rent.
It's never been considered financially wise to purchase a home if you know for certain you are living somewhere on a temporary basis. Any amount of time under 4 years is considered temporary.
However, if you are fairly certain you have settled where you'll be calling "home" for many years to possibly forever, renting is not advantageous. I wouldn't go so far as to say that renting is "stupid." It simply may be the less financially sound thing to do.
As for the landlord end of this. In order for someone to "get rich" as a landlord, they need to own several or more rental properties. The person who owns only one or two rental properties may only be making enough of a profit to pay one or 2 major bills per year. In other words, most landlords with one or 2 rentals, still must work their own full-time job in order to live well. The reality is that in these cases, your rent is not "making someone else rich!"
Please consider that owning is a huge responsibility with taxes, insurance, repairs, maintenance and local inspection fees. It's not all cash in their pockets! When deciding to own rental properties, one must consider that whatever the gross rental fees amount to, perhaps only 40 to 50% would be net.
Providing you rent from a responsible, fair person, renting is much more hassle-free than owning. So if your goal is to have your spare time & money to yourself by not pouring both into owning your own home, renting is actually the smarter decision for you.
What comes into play with a decision to buy or rent is also the particular area involved. The prices of homes as well as the average costs to rent in any given location are vital facts to look into quite thoroughly.
Finally, IMO, anyone considering the purchase of a home, should not rush into this major transaction without ample research and sound practical reasons. Rent until you are very sure.
No, renting might make logical sense if one can't afford to put down a good down payment on a home.
Most people fresh out of high school or college can't afford to buy. It may take years to save up a decent down payment.
A lot of what happened during the financial crisis was the result of people attempting buy homes with no money down or 1-3% down using "creative financing" on $300k + homes only to later realize they couldn't afford the mortgage and property taxes along with all the other expenses involved with home ownership.
Traditionally there has always been an assumption that property values just keep going up over time. However the recession in the early 90s and the "great recession" of 2008/2009 left many homeowners owing more to the bank than what their home is valued at. Some saw drops in value of $50-$100k+.
A tenant can call his/her landlord about a leaking roof, a stove that's not working properly, water heater, or furnace that doesn't heat up and have them take care of it.
Eviction is a pain. Laws tend to be more pro-tenant in disputes.
There's also a misconception that all landlords are rich.
The reality is (most landlords) especially those in their 30s, 40s, and 50s are paying mortgages along with property taxes on their rental properties. Rarely are they able to cover all of the expenses, and taxes/repairs of their properties with just the rents they collect.
The real money making doesn't happen until after they own the building "free and clear". Even then the rent is more or less "supplemental income" for retirement until one decides to sell.
Lastly a retired person may choose to downsize and rent a condo which will give them flexibility to move whenever they want to.
It's not always stupid. Homeowners have expenses (property taxes, insurance, repairs, etc.) that renters don't have.
Renters often pay less for their residence on a yearly basis than buyers do. Yes, buyers end up with assets that renters don't have once they've put a good deal of money into their home, but renters could end up with near as much in the bank if they put some of the extra money they've saved into a savings account or investments with moderate risks.
The problem is a lot of renters don't put that money they're saving into account. But of course, if you buy a house and you're not on top of your finances, you end up paying way more for it in the end and can even lose it all.
We chose to rent because if we bought a house, we'd have been putting virtually everything we earn into it every month. But with renting, our monthly expenses are lower, we have more to save and to spend. Plus we get all the amenities, repairs, pest control (necessary in Florida, wherever you live), new appliances when old ones break, etc. without having to pay out of our pocket for it. It's worked out for us, and gave us more financial freedom than buying a house would have when we moved here.
Not really. There are some limitations with rentals like not being able to have pets in some places and maybe painting the walls in a color of your choice. But if you rent you do not have to pay property tax. However, I do suggest getting renter's insurance just in case something happens like a fire.
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